Canadian investors are searching for good TSX stocks to add to their self-directed Registered-Retirement Savings Plan (RRSP) portfolios.
In the current market conditions, it makes sense to look for companies that are leaders in their respective sectors and have long track records of delivering dividend growth.
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Fortis
Fortis (TSX: FTS) operates $75 billion in utility assets spread out across Canada, the United States, and the Caribbean. The businesses include power-generation facilities, natural gas distribution utilities, and electric transmission networks.
Rate-regulated assets normally deliver steady and predictable revenue streams. Households and companies need power and natural gas, regardless of the state of the economy.
Fortis has grown over the years through strategic acquisitions and development projects. The current $28.8 billion capital program is expected to boost the rate base by 7% per year over five years. As the new assets are completed and start generating revenue, the jump in earnings should support planned annual dividend increases of 4% to 6% through 2030. That’s solid guidance for investors who are looking for stocks that can provide good total returns through a combination of dividends and capital gains.
Fortis raised the dividend in each of the past 52 years. Investors who use the dividends to buy new stock can get a 2% discount through the dividend-reinvestment plan (DRIP). The current dividend yield is 3.5%.
A $10,000 investment in Fortis 30 years ago would be worth about $340,000 today with the dividends reinvested.
Enbridge
Enbridge (TSX: ENB) trades near $65.50 per share at the time of writing. The stock is down from the 12-month high of around $70, so investors can take advantage of the pullback to pick up a dividend yield that is close to 6%.
Enbridge spent the past few years broadening its asset portfolio through strategic acquisitions. These efforts diversified the revenue stream and added more businesses that generate rate-regulated cash flow. In 2024, Enbridge spent US$14 billion to buy three natural gas utilities in the United States to bundle with the existing ones in Canada. Natural gas demand is expected to rise in the coming years as new gas-fired power generation facilities are built to supply electricity to AI data centres.
Enbridge also moved into export assets. The company purchased an oil export terminal in Texas and took a stake in the Woodfibre liquefied natural gas (LNG) facility being built in British Columbia. International demand for Canadian and U.S. oil and natural gas is on the rise as countries seek out reliable supplies from stable sources.
Enbridge also expanded its wind and solar division to benefit from the ongoing energy transition and rising demand from Tech companies for renewable energy electricity supplies.
Enbridge is working on a $35 billion capital program that will help drive steady growth in distributable cash flow over the medium term. This should support ongoing dividend increases. Enbridge raised the dividend in each of the past 31 years.
A $10,000 investment in ENB stock 30 years ago would be worth around $590,000 today with the dividends reinvested.
The bottom line
There is no guarantee Fortis and Enbridge will deliver the same returns over the next three decades, but these stocks still deserve to be on your radar. The strategy of buying good dividend-growth stocks and using the distributions to acquire new shares is a proven one for building long-term wealth.
